2014

Business Competitiveness

Switzerland
Summary of Results

October 2014
Business Competitiveness Switzerland 2014: Summary of Results
Copyright 2014 by IMD:
Institute for Management Development, Lausanne, Switzerland
For further information, please contact the
IMD World Competitiveness Center at:
IMD
23, Ch. de Bellerive
P.O. Box 915
CH-1001 Lausanne
Switzerland
Tel:
Fax:
e-mail :
Internet:
eShop:

+41 21 618 02 51
+41 21 618 02 04
wccinfo@imd.org
www.imd.org/wcc
www.wcceshop.org

The IMD World Competitiveness Center Team:

At IMD

Professor Arturo Bris

Dr. Jos Caballero
Luchia Mallet
Anne-France Borgeaud Pierazzi
Carin Grydbeck
Madeleine Hediger
Catherine Jobin
William Milner

Director of IMD World Competitiveness Center

Research Fellow
Programs and Client Relationship Associate Manager
Senior Economist & Head of WCC Operations
Projects, Marketing and Press Coordinator
Data Research and Online Services Specialist
Order and Sales Administrator
Information Researcher

In collaboration with Accenture AG:

Thomas D. Meyer
Benjamin Tueck
Steven Fuerth
Benjamin Bastian
David Cheret

Country Managing Director, Accenture AG Switzerland

Senior Manager, Accenture AG Switzerland
Manager, Accenture GmbH Germany
Consulting Analyst, Accenture AG Switzerland
Consulting Analyst, Accenture AG Switzerland

Special thanks to Karine Avagyan (IMD Research Associate), IMD Information Center and IMD IT Support.

Table of Contents
I. Introduction ............................................................................................................................... 2
II. Business competitiveness structure ...................................................................................... 3
III. Key Findings ............................................................................................................................ 5

I. Introduction
The IMD World Competitiveness Center, a pioneering institution in the study of
competitiveness, has developed a groundbreaking conceptual framework and methodology
to study firm competitiveness. The Center partnered with Accenture Switzerland to conduct
a study about the competitiveness of the largest Swiss firms.
The report focuses on the firm-specific practices and processes that successful Swiss
companies employ to strengthen their competitiveness. Our aim was to obtain insights into
the internal behaviors and dynamics of those firms and their effects on the different
dimensions of competitiveness. We did so by gathering relevant data through our Business
Competitiveness Survey, which captured the opinions of respondents regarding their
respective industries, the position of their firms in the business cycle and several intrinsic
corporate dimensions.
We used the Handelszeitung Top 500 Swiss companies (2014) and the Capital IQ Company
Screening Report to identify our sample of companies. We identified the Swiss Growth
Champions (or more competitive firms) according to their profitability from 2009 to 2013.
Using the compound annual growth rate (CAGR) of revenues and profit margin indicators, 36
Growth Champions were identified, including 26 cross-industry firms, 7 banks and 3
insurance companies. Companies were eligible only if data for all five years was available. In
addition, the Growth Champions included only companies with their main headquarters in
Switzerland. The assessment does not include firms that experienced extraordinary events
such as mergers and acquisitions during the 2009 to 2013 period because such events
influenced their results. It also excludes the real estate industry because it showed
extremely volatile results, which were heavily influenced by single development projects.
The IMD World Competitiveness Center contacted 7,333 possible survey respondents from
289 companies. Final results are based on a total of 660 survey responses (9% rate)
representing 104 firms, 69 respondents belong to 14 Growth Champions.
Figure 1. Summary of methodology

Initial phase
Design conceptual
framework
Develop list of criteria
Develop Business
Competitiveness Survey
Identify Growth
Champions

Survey phase
Build online survey
Identify target company
and survey respondents
Launch the Business
Competitiveness Survey
Engage/follow up with
respondents

Analysis phase
Collect data
Map data
Construct
competitiveness factors
Analyze data: Subject
data to tests

II. Business competitiveness structure

Business competitiveness is the capacity of a firm to create value through sustainable longterm growth and profitability. There are two dimensions of business competitiveness
general and intrinsic . The general dimension influences the nature of the practices a firm
chooses to adopt. It refers to structural elements that define the context in which a firm
operates (e.g., the regulatory framework of a given country) and its industry-related
variables (e.g., whether a particular industry is capital or labor intensive).
The intrinsic dimension refers to the behaviors and practices that allow a firm to sustain its
performance over the long term. It includes governance, organizational, functional,
sustainability, talent development and digital factors. The governance factor concerns all the
practices, processes and structures necessary to govern the firm effectively, e.g. the
effective fulfillment of the board of directors role. The organizational factor refers to the top
management teams practices and processes that allow for the sound operation of the firm,
e.g. the ability of the management team to adapt the firms strategy to market changes. The
functional factor relates to the firms operational processes, e.g. marketing strategies and
innovation.
The sustainability, talent development and digital factors concern practices that enable
firms to ensure the effectiveness of its governance and organizational and functional factors,
e.g. practices that enable firms to remain dynamic vis--vis their competitors (e.g. level of
digitization) and the ability of firms to build an organizational culture that fosters
collaboration among its members. Figure 2 represents our conceptualization of business
competitiveness.
Firm performance is an outcome of intrinsic factors in combination with structural and
industry factors. That is to say, intrinsic factors include the capabilities of a particular firm,
which in combination with structural and industry factors impact the performance of the
company. Indeed, the correlation among these factors may be strong, but this is not
surprising because it reflects that firms with high levels of competitiveness function in
contexts that facilitate the conduct of businesses and they implement certain practices and
develop internal processes that have a strong impact on their performance.

Figure 2. Structure of business competitiveness

General
dimensions

Structural
factor

Industry factor

Governance
factor

Business
competitiveness

Organizational
factor

Intrinsic
dimensions

Functional
factor
Sustainability
factor
Talent
development
factor
Digital
factor

III. Key Findings

1. Successful Swiss companies adopt more dynamic governance practices with clear
accountability:

Boards guide the actions of senior leaders by exercising their supervision and
strategic roles effectively.
Boards continuously interact and collaborate with management through an open
information policy.
Accountability is upheld throughout all levels of the company by implementing
consistent performance measurement and evaluation processes.

2. Human capital and employee engagement are crucial for sustaining growth:

Growth Champions consider the development of talent as a key factor in sustaining

growth and profitability.
The fostering of employee engagement complements the recruitment, development
and retention of talent.
The focus on talent as a key priority enables companies to enjoy higher productivity,
lower turnover of key positions and lower absence rates.

3. An innovation-centric culture is key for expanding into new revenue pools:

Continuous innovation is among the factors that significantly differentiate top

performers from other companies in the study.
The encouragement of an innovative culture is however coupled with a limited
willingness to make capital-heavy investments in times of uncertainty.
Top managers recognize the positive correlation between innovation and
competitiveness and encourage employees to work on the improvement of products
and services.

4. A strong and focused organization with transparent management is essential for

surviving uncertainty:

The focus lies in promoting internal strength rather than pursuing unproven market
opportunities.
It is particularly important that objectives for top management and the entire
workforce are set in accordance with the companys strategy.
Transparent decision-making is essential for reducing uncertainty and building trust.

5. Growth Champions develop market-focused strategies:

Successful companies establish long-term client relationships by ensuring ongoing

and in-depth interactions with customers.
Strong emphasis is assigned to the significance of customer insights for the
development of firm strategy.
Acquiring a good understanding of customer needs and businesses is required for
developing customized products and services.
5

6. Successful Swiss companies transform through flexible and lean processes:

Top managers are ready to transform their core business in order to match new
market requirements.
Adjustments to new market forces and requirements are realized without disrupting
daily business.
Process excellence and lean management result in streamlined core business
operations and make room for innovation and future growth.

7. A more risk-averse strategy with ethical standards and a compliance culture is essential
for retaining profits and limiting expenditures:

A high level of trust relates to a lower need to allocate budgets to risk control
measures.
The commitment of employees to the companys targets and guidelines ensures
compliance and consistency with legal requirements.
Appropriate levels of net loans and a stable financial basis enable companies to react
to sudden market changes in an uncertain environment.

We also find that Growth Champions create value at the shareholder and employment
levels. At the shareholder level, Growth Champions achieved abnormal stock market
performance (7.6% per year) during the 20102013 period. At the employment level, Growth
Champions generated about 18% more jobs than other companies in the study did over the
same period.

IMD World Competitiveness Center

Chemin de Bellerive 23
P.O. Box 915
CH-1001 Lausanne
Switzerland
+41 21 618 02 51
wccinfo@imd.org
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